Hanmi Financial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Loans (Tables)

Loans (Tables)

6 Months Ended

Jun. 30, 2023

Loans consisted of the following as of the dates indicated:


	June 30, 2023			December 31, 2022
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,090,739		$	1,023,608
Hospitality		686,168			646,893
Office		559,611			499,946
Other (1)		1,312,192			1,553,729
Total commercial property loans		3,648,710			3,724,176
Construction		89,613			109,205
Residential (2)		886,982			734,472
Total real estate loans		4,625,305			4,567,853
Commercial and industrial loans (3)		753,460			804,492
Equipment financing agreements		586,406			594,788
Loans receivable		5,965,171			5,967,133
Allowance for credit losses		(71,024	)		(71,523	)
Loans receivable, net	$	5,894,147		$	5,895,610

(1)

Includes mixed-use, multifamily, industrial, gas stations, faith-based facilities, medical and warehouse; all other property types represent less than one percent of total loans receivable.

(2)

Includes $2.2 million and $2.4 million of home equity loans and lines, and $4.6 million and $4.6 million of personal loans at June 30, 2023 and December 31, 2022, respectively.

(3)

At June 30, 2023 and December 31, 2022, Paycheck Protection Program loans were $0.2 million and $0.9 million, respectively.

Activity for Loans Held for Sale

The following is the activity for loans held for sale for the three months ended June 30, 2023 and 2022:


	Real Estate			Commercial and Industrial			Total
	(in thousands)
June 30, 2023
Balance at beginning of period	$	379		$	3,273		$	3,652
Originations and transfers		14,494			9,094			23,588
Sales		(9,329	)		(10,614	)		(19,943	)
Principal paydowns and amortization		—			(4	)		(4	)
Balance at end of period	$	5,544		$	1,749		$	7,293

June 30, 2022
Balance at beginning of period	$	11,825		$	3,792		$	15,617
Originations and transfers		29,531			15,320			44,851
Sales		(30,380	)		(11,557	)		(41,937	)
Principal paydowns and amortization		—			(3	)		(3	)
Balance at end of period	$	10,976		$	7,552		$	18,528

The following is the activity for loans held for sale for the six months ended June 30, 2023 and 2022:


	Real Estate			Commercial and Industrial			Total
	(in thousands)
June 30, 2023
Balance at beginning of period	$	3,775		$	4,268		$	8,043
Originations and transfers		30,881			18,023			48,904
Sales		(29,111	)		(20,532	)		(49,643	)
Principal payoffs and amortization		(1	)		(10	)		(11	)
Balance at end of period	$	5,544		$	1,749		$	7,293

June 30, 2022
Balance at beginning of period	$	6,954		$	6,388		$	13,342
Originations and transfers		49,695			27,009			76,704
Sales		(45,673	)		(25,841	)		(71,514	)
Principal payoffs and amortization		—			(4	)		(4	)
Balance at end of period	$	10,976		$	7,552		$	18,528

Allowance for Credit Losses by Portfolio Segment

The following table details the information on the allowance for credit losses by portfolio segment as of and for the three months ended June 30, 2023 and 2022:


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
June 30, 2023
Balance at beginning of period	$	43,531		$	15,333		$	13,385		$	72,249
Charge-offs		—			(103	)		(2,604	)		(2,707	)
Recoveries		62			555			350			967
Provision (recovery) for credit losses		(539	)		244			810			515
Ending balance	$	43,054		$	16,029		$	11,941		$	71,024

June 30, 2022
Balance at beginning of period	$	46,355		$	12,944		$	12,213		$	71,512
Charge-offs		—			(21	)		(585	)		(606	)
Recoveries		64			133			325			522
Provision (recovery) for credit losses		(307	)		1,219			727			1,639
Ending balance	$	46,112		$	14,275		$	12,680		$	73,067

The following table details the information on the allowance for credit losses by portfolio segment as of and for the six months ended June 30, 2023 and 2022:


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
June 30, 2023
Balance at beginning of period	$	44,026		$	15,267		$	12,230			71,523
Charge-offs		(412	)		(312	)		(4,220	)		(4,944	)
Recoveries		130			791			829			1,750
Provision (recovery) for credit losses		(690	)		283			3,102			2,695
Ending balance	$	43,054		$	16,029		$	11,941		$	71,024

June 30, 2022
Balance at beginning of period	$	48,890		$	12,418		$	11,249		$	72,557
Charge-offs		(530	)		(79	)		(832	)		(1,441	)
Recoveries		259			451			747			1,457
Provision (recovery) for credit losses		(2,507	)		1,485			1,516			494
Ending balance	$	46,112		$	14,275		$	12,680		$	73,067

The table below illustrates the allowance for credit losses by loan portfolio segment and each loan portfolio segment as a percentage of total loans.


	June 30, 2023										December 31, 2022
	Allowance Amount		Percentage of Total Allowance			Total Loans		Percentage of Total Loans			Allowance Amount		Percentage of Total Allowance			Total Loans		Percentage of Total Loans
	(dollars in thousands)
Real estate loans:
Commercial property
Retail	$	10,021		14.1	%	$	1,090,739		18.3	%	$	7,872		11.0	%	$	1,023,608		17.2	%
Hospitality		14,381		20.2			686,168		11.5			13,407		18.7			646,893		10.8
Office		2,668		3.8			559,611		9.4			2,293		3.2			499,946		8.4
Other		8,277		11.7			1,312,192		22.0			13,056		18.3			1,553,729		26.0
Total commercial property loans		35,347		49.8			3,648,710		61.2			36,628		51.2			3,724,176		62.4
Construction		3,017		4.2			89,613		1.5			4,022		5.7			109,205		1.8
Residential		4,690		6.6			886,982		14.9			3,376		4.7			734,472		12.4
Total real estate loans		43,054		60.6			4,625,305		77.6			44,026		61.6			4,567,853		76.6
Commercial and industrial loans		16,029		22.6			753,460		12.6			15,267		21.3			804,492		13.4
Equipment financing agreements		11,941		16.8			586,406		9.8			12,230		17.1			594,788		10.0
Total	$	71,024		100.0	%	$	5,965,171		100.0	%	$	71,523		100.0	%	$	5,967,133		100.0	%

Summary of Amortized Cost Basis of Collateral Dependent Loans By Class of Loans

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2023 and December 31, 2022, for which repayment is expected to be obtained through the sale of the underlying collateral.


	June 30, 2023		December 31, 2022
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,785	$	1,930
Hospitality		—		—
Office		—		—
Other (1)		1,749		256
Total commercial property loans		3,534		2,186
Residential		—		508
Total real estate loans		3,534		2,694
Commercial and industrial loans		10,002		—
Total	$	13,536	$	2,694

(1)

Includes mixed-use, multifamily, industrial, gas stations, faith-based facilities, medical and warehouse; all other property types represent less than one percent of total loans receivable.

Credit Quality of Loan Portfolio


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2023		2022			2021			2020		2019		Prior			Revolving Loans Amortized Cost Basis			Total
	(in thousands)
June 30, 2023
Real estate loans:
Commercial property
Risk Rating									`
Pass / Pass-Watch	$	289,308	$	1,040,840		$	874,899		$	583,087	$	389,705	$	392,812		$	35,832		$	3,606,483
Special Mention		5,021		—			6,879			4,358		1,441		3,658			1,700			23,057
Classified		1,258		—			4,815			—		4,910		8,187			—			19,170
Total commercial property		295,587		1,040,840			886,593			587,445		396,056		404,657			37,532			3,648,710
YTD gross charge-offs		—		—			—			412		—		—			—			412
YTD net charge-offs		—		—			—			409		—		(122	)		—			287

Construction
Risk Rating
Pass / Pass-Watch		35,266		5,553			48,794			—		—		—			—			89,613
Special Mention		—		—			—			—		—		—			—			—
Classified		—		—			—			—		—		—			—			—
Total construction		35,266		5,553			48,794			—		—		—			—			89,613
YTD gross charge-offs		—		—			—			—		—		—			—			—
YTD net charge-offs		—		—			—			—		—		—			—			—

Residential
Risk Rating
Pass / Pass-Watch		190,664		386,637			163,916			12,893		224		126,749			5,395			886,478
Special Mention		—		—			—			—		—		—			500			500
Classified		—		—			—			—		—		4			—			4
Total residential		190,664		386,637			163,916			12,893		224		126,753			5,895			886,982
YTD gross charge-offs		—		—			—			—		—		—			—			—
YTD net charge-offs		—		—			—			—		—		(5	)		—			(5	)

Total real estate loans
Risk Rating
Pass / Pass-Watch		515,238		1,433,030			1,087,609			595,980		389,929		519,561			41,227			4,582,574
Special Mention		5,021		—			6,879			4,358		1,441		3,658			2,200			23,557
Classified		1,258		—			4,815			—		4,910		8,191			—			19,174
Total real estate loans		521,517		1,433,030			1,099,303			600,338		396,280		531,410			43,427			4,625,305
YTD gross charge-offs		—		—			—			412		—		—			—			412
YTD net charge-offs		—		—			—			409		—		(127	)		—			282

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		124,225		183,892			90,137			35,174		13,773		11,255			261,197			719,653
Special Mention		—		17,100			—			105		—		3,871			—			21,076
Classified		—		887			—			84		46		232			11,482			12,731
Total commercial and industrial loans		124,225		201,879			90,137			35,363		13,819		15,358			272,679			753,460
YTD gross charge-offs		—		—			—			—		75		237			—			312
YTD net charge-offs		—		(13	)		(3	)		—		74		(536	)		(1	)		(479	)

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		112,990		259,432			130,303			34,592		33,393		8,761			—			579,471
Special Mention		—		—			—			—		—		—			—			—
Classified		84		2,974			2,633			173		782		289			—			6,935
Total equipment financing agreements		113,074		262,406			132,936			34,765		34,175		9,050			—			586,406
YTD gross charge-offs		—		1,249			1,840			287		635		209			—			4,220
YTD net charge-offs		—		1,223			1,614			260		300		(6	)		—			3,391

Total loans receivable:
Risk Rating
Pass / Pass-Watch		752,453		1,876,354			1,308,049			665,746		437,095		539,577			302,424			5,881,698
Special Mention		5,021		17,100			6,879			4,463		1,441		7,529			2,200			44,633
Classified		1,342		3,861			7,448			257		5,738		8,712			11,482			38,840
Total loans receivable	$	758,816	$	1,897,315		$	1,322,376		$	670,466	$	444,274	$	555,818		$	316,106		$	5,965,171
YTD gross charge-offs		—		1,249			1,840			699		710		446			—			4,944
YTD net charge-offs		—		1,210			1,611			669		374		(669	)		(1	)		3,194

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total

December 31, 2022
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	1,184,361	$	901,029	$	600,740	$	404,786	$	301,950	$	207,861	$	50,877	$	3,651,604
Special Mention		847		13,384		5,857		7,115		—		6,080		1,701		34,984
Classified		—		—		412		4,312		12,304		20,560		—		37,588
Total commercial property		1,185,208		914,413		607,009		416,213		314,254		234,501		52,578		3,724,176

Construction
Risk Rating
Pass / Pass-Watch		41,662		67,543		—		—		—		—		—		109,205
Special Mention		—		—		—		—		—		—		—		—
Classified		—		—		—		—		—		—		—		—
Total construction		41,662		67,543		—		—		—		—		—		109,205

Residential
Risk Rating
Pass / Pass-Watch		405,975		173,236		13,102		232		731		134,766		5,422		733,464
Special Mention		—		—		—		—		—		—		500		500
Classified		12		—		—		—		—		496		—		508
Total residential		405,987		173,236		13,102		232		731		135,262		5,922		734,472

Total real estate loans
Risk Rating
Pass / Pass-Watch		1,631,998		1,141,808		613,842		405,018		302,681		342,627		56,299		4,494,273
Special Mention		847		13,384		5,857		7,115		—		6,080		2,201		35,484
Classified		12		—		412		4,312		12,304		21,056		—		38,096
Total real estate loans		1,632,857		1,155,192		620,111		416,445		314,985		369,763		58,500		4,567,853

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		368,778		100,537		39,577		24,117		7,342		12,282		205,951		758,584
Special Mention		—		9,285		—		—		29		102		34,113		43,529
Classified		—		—		171		1,097		81		391		639		2,379
Total commercial and industrial loans		368,778		109,822		39,748		25,214		7,452		12,775		240,703		804,492

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		305,249		165,313		46,970		52,133		17,608		1,798		—		589,071
Special Mention		—		—		—		—		—		—		—		—
Classified		630		2,542		311		1,581		565		88		—		5,717
Total equipment financing agreements		305,879		167,855		47,281		53,714		18,173		1,886		—		594,788

Total loans receivable:
Risk Rating
Pass / Pass-Watch		2,306,025		1,407,658		700,389		481,268		327,631		356,707		262,250		5,841,928
Special Mention		847		22,669		5,857		7,115		29		6,182		36,314		79,013
Classified		642		2,542		894		6,990		12,950		21,535		639		46,192
Total loans receivable	$	2,307,514	$	1,432,869	$	707,140	$	495,373	$	340,610	$	384,424	$	299,203	$	5,967,133

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

Loans by Vintage Year and Payment Performance


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2023		2022			2021			2020		2019		Prior			Revolving Loans Amortized Cost Basis			Total
	(in thousands)
June 30, 2023
Real estate loans:
Commercial property
Payment performance
Performing	$	295,587	$	1,040,840		$	886,593		$	587,445	$	395,970	$	400,623		$	37,532		$	3,644,590
Nonperforming		—		—			—			—		86		4,034			—			4,120
Total commercial property		295,587		1,040,840			886,593			587,445		396,056		404,657			37,532			3,648,710
YTD gross charge-offs		—		—			—			412		—		—			—			412
YTD net charge-offs		—		—			—			409		—		(122	)		—			287

Construction
Payment performance
Performing		35,266		5,553			48,794			—		—		—			—			89,613
Nonperforming		—		—			—			—		—		—			—			—
Total construction		35,266		5,553			48,794			—		—		—			—			89,613
YTD gross charge-offs		—		—			—			—		—		—			—			—
YTD net charge-offs		—		—			—			—		—		—			—			—

Residential
Payment performance
Performing		190,664		386,637			163,916			12,893		224		126,749			5,895			886,978
Nonperforming		—		—			—			—		—		4			—			4
Total residential		190,664		386,637			163,916			12,893		224		126,753			5,895			886,982
YTD gross charge-offs		—		—			—			—		—		—			—			—
YTD net charge-offs		—		—			—			—		—		(5	)		—			(5	)

Total real estate loans
Payment performance
Performing		521,517		1,433,030			1,099,303			600,338		396,194		527,372			43,427			4,621,181
Nonperforming		—		—			—			—		86		4,038			—			4,124
Total real estate loans		521,517		1,433,030			1,099,303			600,338		396,280		531,410			43,427			4,625,305
YTD gross charge-offs		—		—			—			412		—		—			—			412
YTD net charge-offs		—		—			—			409		—		(127	)		—			282

Commercial and industrial loans:
Payment performance
Performing		124,225		201,862			90,137			35,363		13,819		15,245			261,689			742,340
Nonperforming		—		17			—			—		—		113			10,990			11,120
Total commercial and industrial loans		124,225		201,879			90,137			35,363		13,819		15,358			272,679			753,460
YTD gross charge-offs		—		—			—			—		75		237			—			312
YTD net charge-offs		—		(13	)		(3	)		—		74		(536	)		(1	)		(479	)

Equipment financing agreements:
Payment performance
Performing		112,990		259,432			130,303			34,592		33,393		8,761			—			579,471
Nonperforming		84		2,974			2,633			173		782		289			—			6,935
Total equipment financing agreements		113,074		262,406			132,936			34,765		34,175		9,050			—			586,406
YTD gross charge-offs		—		1,249			1,840			287		635		209			—			4,220
YTD net charge-offs		—		1,223			1,614			260		300		(6	)		—			3,391

Total loans receivable:
Payment performance
Performing		758,732		1,894,324			1,319,743			670,293		443,406		551,378			305,116			5,942,992
Nonperforming		84		2,991			2,633			173		868		4,440			10,990			22,179
Total loans receivable	$	758,816	$	1,897,315		$	1,322,376		$	670,466	$	444,274	$	555,818		$	316,106		$	5,965,171
YTD gross charge-offs		—		1,249			1,840			699		710		446			—			4,944
YTD net charge-offs		—		1,210			1,611			669		374		(669	)		(1	)		3,194

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total

December 31, 2022
Real estate loans:
Commercial property
Payment performance
Performing	$	1,185,208	$	914,413	$	606,597	$	416,213	$	312,324	$	233,643	$	52,578	$	3,720,976
Nonperforming		—		—		412		—		1,930		858				3,200
Total commercial property		1,185,208		914,413		607,009		416,213		314,254		234,501		52,578		3,724,176

Construction
Payment performance
Performing		41,662		67,543		—		—		—		—		—		109,205
Nonperforming		—		—		—		—		—		—		—		—
Total construction		41,662		67,543		—		—		—		—		—		109,205

Residential
Payment performance
Performing		405,975		173,236		13,102		232		731		134,766		5,922		733,964
Nonperforming		12		—		—		—		—		496		—		508
Total residential		405,987		173,236		13,102		232		731		135,262		5,922		734,472

Total real estate loans
Payment performance
Performing		1,632,845		1,155,192		619,699		416,445		313,055		368,409		58,500		4,564,145
Nonperforming		12		—		412		—		1,930		1,354		—		3,708
Total real estate loans		1,632,857		1,155,192		620,111		416,445		314,985		369,763		58,500		4,567,853

Commercial and industrial loans:
Payment performance
Performing		368,778		109,822		39,577		25,199		7,452		12,539		240,703		804,070
Nonperforming		—		—		171		15		—		236		—		422
Total commercial and industrial loans		368,778		109,822		39,748		25,214		7,452		12,775		240,703		804,492

Equipment financing agreements:
Payment performance
Performing		305,249		165,313		46,970		52,133		17,608		1,798		—		589,071
Nonperforming		630		2,542		311		1,581		565		88		—		5,717
Total equipment financing agreements		305,879		167,855		47,281		53,714		18,173		1,886		—		594,788

Total loans receivable:
Payment performance
Performing		2,306,872		1,430,327		706,246		493,777		338,115		382,746		299,203		5,957,286
Nonperforming		642		2,542		894		1,596		2,495		1,678		—		9,847
Total loans receivable	$	2,307,514	$	1,432,869	$	707,140	$	495,373	$	340,610	$	384,424	$	299,203	$	5,967,133

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

Analysis of Past Due Loans, Including Loans on Nonaccrual Status, Disaggregated by Loan Class

The following is an aging analysis of loans, including loans on nonaccrual status, disaggregated by loan class, as of the dates indicated:


	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total
	(in thousands)
June 30, 2023
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	1,090,739	$	1,090,739
Hospitality		—		49		—		49		686,119		686,168
Office		—		—		—		—		559,611		559,611
Other		24		573		1,499		2,096		1,310,096		1,312,192
Total commercial property loans		24		622		1,499		2,145		3,646,565		3,648,710
Construction		—		—		—		—		89,613		89,613
Residential		1,036		—		—		1,036		885,946		886,982
Total real estate loans		1,060		622		1,499		3,181		4,622,124		4,625,305
Commercial and industrial loans		5,113		10,066		—		15,179		738,281		753,460
Equipment financing agreements		5,631		2,284		3,434		11,349		575,057		586,406
Total loans receivable	$	11,804	$	12,972	$	4,933	$	29,709	$	5,935,462	$	5,965,171

December 31, 2022
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	1,023,608	$	1,023,608
Hospitality		—		—		—		—		646,893		646,893
Office		—		—		—		—		499,946		499,946
Other		—		494		—		494		1,553,235		1,553,729
Total commercial property loans		—		494		—		494		3,723,682		3,724,176
Construction		—		—		—		—		109,205		109,205
Residential		313		804		7		1,124		733,348		734,472
Total real estate loans		313		1,298		7		1,618		4,566,235		4,567,853
Commercial and industrial loans		77		79		—		156		804,336		804,492
Equipment financing agreements		5,825		1,271		2,949		10,045		584,743		594,788
Total loans receivable	$	6,215	$	2,648	$	2,956	$	11,819	$	5,955,314	$	5,967,133

At June 30, 2023 and December 31, 2022, there were no loans 90 days or more past due and still accruing interest.

Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due 90 Days and Still Accruing

The following table represents the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of June 30, 2023 and December 31, 2022.


	June 30, 2023
	Nonaccrual Loans With No Allowance for Credit Losses		Nonaccrual Loans With Allowance for Credit Losses		Loans Past Due 90 Days Still Accruing		Total Nonperforming Loans
	(in thousands)
Real estate loans:
Commercial property
Retail	$	2,021	$	169	$	—	$	2,190
Hospitality		—		49		—		49
Office		—		—		—		—
Other		1,749		132		—		1,881
Total commercial property loans		3,770		350		—		4,120
Residential		—		4		—		4
Total real estate loans		3,770		354		—		4,124
Commercial and industrial loans		—		11,120		—		11,120
Equipment financing agreements		446		6,489		—		6,935
Total	$	4,216	$	17,963	$	—	$	22,179

	December 31, 2022
	Nonaccrual Loans With No Allowance for Credit Losses		Nonaccrual Loans With Allowance for Credit Losses		Loans Past Due 90 Days Still Accruing		Total Nonperforming Loans
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,929	$	—	$	—	$	1,929
Office		—		—		—		—
Other		540		731		—		1,271
Total commercial property loans		2,469		731		—		3,200
Residential		508		—		—		508
Total real estate loans		2,977		731		—		3,708
Commercial and industrial loans		—		422		—		422
Equipment financing agreements		215		5,501		—		5,716
Total	$	3,192	$	6,654	$	—	$	9,846

Non-Performing Assets

The following table details nonperforming assets as of the dates indicated:


	June 30, 2023		December 31, 2022
	(in thousands)
Nonaccrual loans	$	22,179	$	9,846
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		22,179		9,846
Other real estate owned ("OREO")		117		117
Total nonperforming assets	$	22,296	$	9,963